Farmers Seek Fair Share Amid India's Housing Boom

Workers construct an apartment building in Greater Noida, on the outskirts of New Delhi, India, Aug. 3, 2011. As many as 100,000 new apartment units are scheduled to be built on land that previously belonged to farmers. A court has halted some development on the grounds that the farmers weren't fairly compensated.

Buffalo graze in the backdrop of apartments under construction in Greater Noida, Aug. 3, 2011. While farmers seek fair compensation for their land, many worried buyers have invested their life savings in down payments on apartments that haven't been built yet.

Gurinder OsanAP

A land crisis is gripping India. The country's growing prosperity has created a rapidly expanding middle class that is demanding modern housing and has the money to pay for it.

But building millions of new houses and apartments isn't easy, especially in a country where land is hard to come by.

A land battle on the outskirts of New Delhi illustrates the point.

The property, in an area known as Greater Noida, is undergoing the transition from cropland to towering apartment blocks. Right now, though, it's a visual and legal mess.

Authorities say this area alone has about 100,000 apartment units in the process of development, but many of those deals are now in legal limbo.

Farmers Fighting Back

The farmers who originally owned the land have now decided that they were shortchanged when they were forced to sell it to the local government.

"The government took our land under false pretenses," says Ajay Kumar Nagar, a farmer and the chief of a farming village.

He says the land was sold under a law that allows farmland to be taken for "urgent industrial development." But after acquiring the land, the government then turned around and sold it to residential developers for more than 10 times the original price.

Nagar and other farmers say they went to court to get a larger share of that money.

To the surprise of nearly everyone, the farmers won.

A state high court ruled that development had to stop in the area covered by the lawsuit, and the land had to be returned to the farmers.

That meant tens of thousands of would-be apartment buyers were suddenly faced with the potential loss of the biggest investment of their lives.

"I am losing because I have given 40 percent payment to the builder, which is my savings," says Nishant Singh Virk.

The 34-year-old software engineer says that amounted to about $34,000 for an apartment that hasn't been built yet. He had to take out a mortgage for the rest, a mortgage that he will have to pay regardless of whether he gets his apartment.

Although the current lawsuit only affects a few thousand buyers, the legal principle could apply to as many as 100,000.

Balancing Competing Demands

What's at stake is more than just money: In India, a modern apartment is the ultimate sign that a person has arrived in the middle class.

India's rapidly growing economy means that millions of people now make enough money to afford an apartment. But right now, most of those apartments only exist in their dreams.

Getamber Anand is the head of a builders' association called CREDAI.

"The documented shortage today is 24 million units — in the urban areas," he says. "If you look at rural India, add another 70 million. That is the kind of shortage we're talking of in housing. Now here's an issue which needs to be addressed."

Anand is also the managing director of a development company called ATS that has projects in the disputed area.

He says the government should continue to be the middleman in acquiring land from farmers and selling it to developers, to assure fairness for both sides.

But he agrees that farmers deserve a bigger chunk of the pie.

For its part, the Noida development authority defends its profit on the land deals, saying it needs much of that money to build infrastructure for the new developments, including roads, water and sewage treatment.

Last week, the government and farmers reached an agreement in which farmers promised not to block construction for the next three months, and the government agreed to return some of the developed land to the farmers.

The part that still hasn't been resolved, though, is how much more money the farmers will receive for their land, and, if increased payments are made retroactive, how far back they will go.

As the same kind of development goes on in cities throughout India, a lot of people have a lot of money riding on that decision.